Daily Digest Market Movers: Gold price struggles to lure buyers amid the Fed rate-cut uncertainty
- A combination of diverging forces fails to provide any meaningful impetus to the Gold price and leads to subdued range-bound price action on the first day of a new week.
- Data published on Friday showed that inflation in May slowed to its lowest annual rate in more than three years, lifting bets for a rate cut by the Federal Reserve in September.
- The US Bureau of Economic Analysis reported that the Personal Consumption Expenditures (PCE) Price Index edged lower to 2.6% on a yearly basis in May from 2.7% in April.
- The core PCE Price Index, which excludes volatile food and energy prices, decelerated from 2.8% in April to 2.6% in May, marking the lowest annual rate since March 2021.
- The US Dollar retreats sharply from a nearly two-month peak in reaction to the in-line inflation data and drops to a multi-day low on Monday, lending support to the commodity.
- The first round of France's parliamentary election on Sunday provided little clarity on whether the far-right party will be able to form a government after next Sunday's run-off.
- Moreover, President Joe Biden's disastrous debate with Republican opponent Donald Trump adds to the political uncertainty amid geopolitical risks and lends support to the XAU/USD.
- Meanwhile, an official survey showed on Sunday that China's manufacturing activity fell for the second straight month in June, and services activity slipped to a five-month low.
- However, the latest data released on Monday revealed that China's Caixin Manufacturing PMI unexpectedly edged higher from 51.7 to 51.8 in June against the 51.2 expected.
- Meanwhile, the recent hawkish comments by influential FOMC members raise uncertainty about the Fed's rate-cut path, leading to a further rise in the US Treasury bond yields.
- Richmond Fed President Thomas Barkin said on Friday that he will proceed deliberately on monetary policy as services and shelter price-setters still have room to push prices higher.
- San Francisco Fed President Mary Daly told CNBC that cooling inflation shows that the monetary policy is working, but it’s too early to tell when it will be appropriate to cut rates.
- This, in turn, should keep a lid on any meaningful appreciating move for the non-yielding yellow metal ahead of this week's key US macro releases, including the NFP report on Friday.
- In the meantime, traders will take cues from the release of the US ISM Manufacturing PMI, which, along with the broader risk sentiment, should influence the commodity on Monday.
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